Steel Products

SMU CEO Believes Steel "Super Cycle" Has Started

Written by John Packard

It is my opinion the U.S. is entering a “super cycle” that will be good for the steel industry and could well keep steel prices above the historical $600-$650 per ton average on benchmark hot rolled coils. This does not mean prices won’t scale back once more supply comes into the market. I am of the opinion it is in no one’s best interest – steel mills or their end customers – to keep prices above $1,000 per ton (SMU’s HRC index is $1,200 per ton this past week).

John Packard Summit 18What is going to propel the super cycle? Inventories remain low at service centers and the end manufacturing companies. It may well take into this summer before inventories become balanced. One mill told us they will not have many spot tons available until June as they are dealing with the large number of late orders they have in their pipeline.

We may see an uptick in the energy sector with oil prices hovering around $60 per barrel. Texas is proving how badly the country needs to work on the electrical grid (a steel intensive project). The Biden administration is determined to push a $2 trillion infrastructure bill through later this year.

I remind those who attended the Tampa Steel Conference earlier this month, Dr. Kemmsies forecast an additional 215 million tons of steel will be needed over the next five years. This is above and beyond our normal needs (I will leave it up to you as to whether you believe Dr. Kemmsies’ analysis of the markets).

As the pandemic ends around the world we will see business demand boom. U.S. consummers will have higher home values, more savings and a desire to spend. I expect this boom will not be short lived and will assist in keeping steel prices higher than what we have seen as “normal” over the past few decades.

SMU Flat Rolled & Plate Market Trends

Last week, SMU conducted one of our flat rolled and plate steel market trends analyses utilizing our every-other-week survey. Last week, 43 percent of the participants were manufacturers, 41 percent were service centers, 5 percent were trading companies, 7 percent steel mills and the balance were either toll processors or suppliers to the industry.

Our SMU Steel Buyers Sentiment Index was quite optimistic both as a single data point (+70) and the three-month moving average (+66). Premium members have the opportunity to look at the Sentiment data in a historical context by accessing the survey results on our website. This week’s PowerPoint presentation is 52 slides in length, and it contains a wide range of data regarding demand, negotiations, lead times, inventories and much more. If you are interested in learning what is available to Premium level members, please reach out to Paige Mayhair at

According to the responses from the steel mills, there are only two market segments which are weak right now – energy and office furniture.

We also asked the mills how long it will take before they catch up on their late orders. Here are the results:

Mill late orders catch up 2.21.2021

We are conducting our first virtual Steel Hedging 201: Advanced Strategies & Execution Workshop on Tuesday and Wednesday mornings of this week (Feb. 23 and 24). We do have room for a few more attendees. If interested, click here or reach out to

On March 30 and 31 we will virtually host another Steel Hedging 101: Introduction to Managing Price Risk Workshop. You can learn more by clicking here.

The next Steel 101: Introduction to Steel Making & Market Fundamentals Workshop will be held virtually on May 11 and 12. You can learn more about this workshop by clicking here.

Finally, the SMU Steel Summit Conference is slated to be live this year back in Atlanta on Aug. 23-25. We are building an exceptional program. You can learn more about the conference and how to register by clicking here.

As always, your business is truly appreciated by all of us here at Steel Market Update.

John Packard, President & CEO,

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